2014 F1 season

A High Court judge has dismissed a case brought by Constantin Medien against Formula One chief executive Bernie Ecclestone.

The German media group alleged Ecclestone arranged the 2006 sale of Formula One to CVC Capital Partners at less than its true value and sought $140m in damages.

Justice Newey ruled that although Ecclestone did enter into a “corrupt arrangement” with German banker Gerhard Gribkowsky it did not come at a cost to Constantin.

“The payments were a bribe,” the judge ruled. “They were made because Mr Ecclestone had entered into a corrupt agreement with Dr Gribkowsky in May 2005 under which Dr Gribkowsky was to be rewarded for facilitating the sale of [Bayerische Landesbank’s] shares in the Formula One group to a buyer acceptable to Mr Ecclestone.”

However he noted that Ecclestone did not intend to sell BayrenLB’s shares at less than their true value and added: “No loss to Constantin has been shown to have been caused by the corrupt arrangement with Dr Gribkowsky.”

“That fact is fatal to the claim as against all the defendants.”

Ecclestone is due to go on trial in Germany in April on charges of bribery relating to his arrangement with Gribkowsky.

on the charge of corruption/bribery, guilt has been proven in this court.

Er, not really. In the Medien case there has been a finding of fact in a civil proceeding, viz. that Bernie paid a bribe. There is no “charge” laid nor “guilt” proven, those are concepts of criminal law. There is an overlap between the conduct (ie. the bribe) which formed an element of Medien’s civil claim, and the criminal charges which will be shortly heard in Germany, but they are separate things.

That said, the evidence from the civil case will likely be very useful to the German prosecutors.

Well if there’s a claim brought for damages, and there are no damages, then there is no claim. It’s the charges of bribery before the German courts that are the real threat to Bernie. He’s not out of the woods yet.

This is a phyric victory, even though Bernie won’t have to pay anything. A judge has found that he engaged in a corrupt arrangement. It is a finding of such gravity that unless disturbed on appeal, makes it almost impossible for CVC to allow him to continue to run the sport. After all, it goes to the heart of the very transaction by which it acquired the commercial rights. He is toast now, even if he avoids a conviction in the German criminal proceedings.

From my reading of it, the claim had merit but Constantin couldn’t prove they had suffered loss (in the rather murky legal definition of loss). It would seem a logical conclusion that if they were out of pocket then they would have been able to claim this. At the end of the day, damages are only to give you back what you have lost.

Just because the Judge in this case said he was dealing in a corrupt manner legally means nothing for Bernie. The only damage this does to Bernie is PR. Also he won’t appeal this decision as (to my understanding) this was a civil claim which the plaintiffs lost. It would be up to the plaintiffs to appeal.

It’s up to CVC to decide if the want to force him out but he hasn’t been convicted of anything (yet) and the plaintiffs in this case failed to show that his actions caused them economic loss so technically he ‘won’. I’ve got a feeling that Bernie being Bernie he can survive this bout of negative publicity and scandal as he’s done so often before.

This isn’t a win for Ecclestone. The High Court effectively ruled him guilty of bribery and entering in a “corrupt agreement”, the charges he is facing in Germany. He walks today, but in April the picture changes completely. Expect him to step down from his FOM role within the next 6 months.